Thursday, Oct 15, 1992

Genentech Reports Third Quarter Results

South San Francisco, Calif. -- October 15, 1992 --

Genentech, Inc. (NYSE: GNE) announced today that revenues for the third quarter 1992 increased 2 percent to $137.3 million, from $135.0 million in the same quarter of 1991. Earnings decreased to $7.7 million, or 7 cents per share, from earnings of $13.5 million, or 12 cents per share in the third quarter of the previous year.

As Genentech reported for the second quarter of 1992, the decrease in earnings despite increased revenues resulted primarily from continued large investment in research and development in pursuit of aggressive product development goals. R&D expenditures in the third quarter of 1992 were $69.6 million, up from $59.9 million in the third quarter of 1991.

Sales of Protropin® human growth hormone increased 7 percent to $51.0 million from $47.5 million in the third quarter of 1991. This market has continued to grow due to the increasing number of patients diagnosed as growth hormone inadequate.

Third quarter 1992 Activase® t-PA sales increased 6 percent to $49.4 million, from $46.7 million in the third quarter of 1991. "This increase in Activase sales stems largely from the recent introduction of a new Activase vial size," said G. Kirk Raab, Genentech's president and chief executive officer. "The new vial contains the standard Activase dose of 100 mg and it offers features to simplify and speed administration of Activase. Initial stocking of the new vial size by wholesalers and hospital pharmacies has had a temporary impact on sales." Genentech's U.S. thrombolytic market share remains at slightly over 50 percent, where it has stabilized over the past year.

The results of two recently reported clinical trials may have a favorable impact on Activase sales. Clinical investigators presented the results of the LATE trial in Barcelona in August. This international study of nearly 6,000 patients showed that Activase reduced mortality when administered up to 12 hours after the first symptoms of heart attack -- six hours later than thrombolytic therapy routinely is administered in the United States. Up to 30 percent of heart attack patients do not reach the hospital within six hours of the first symptoms of heart attack.

A data analysis reported in July in the New England Journal of Medicine suggested that heart attack patients over the age of 75 benefit even more from thrombolytic therapy than younger patients, though, in the United States, they are much less likely than younger patients to receive this therapy. About 100,000 Americans over the age of 75 are hospitalized each year as a result of heart attacks.

Consistent with the rarity of chronic granulomatous disease, which Actimmune® interferon gamma is approved to treat, third quarter 1992 sales of Actimmune were $0.8 million.

In clinical research, preliminary results of Phase I trials of an early version of Genentech's gp120 molecule, reported in July at the VIII International Conference on AIDS in Amsterdam, showed it is safe and it elicits an immune response. Further studies (using a modified gp120 more representative of HIV strains common in the United States and Europe) are underway to determine if the observed immune responses will translate into clinical benefits.

Raab said, "Progress toward our product development goals continues for our broad pipeline. The strength of Genentech's marketed products combined with the potential of the many products in our pipeline provide a promising outlook for Genentech's future. "

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant medical needs. The company has headquarters in South San Francisco, California and is traded on the New York and Pacific Stock exchanges under the symbol GNE.

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(in thousands, except per share amounts)

Three Months
Ended September 30,

1992 1991
   Product sales $ 101,151 $ 94,671
   Royalties 23,301 18,976
   Contract and other 1,404 9,357
   Interest 11,445 11,994
      Total revenues 137,301 134,998
Costs and expenses
   Cost of sales 17,316 16,622
   Research and development 69,636 59,883
   Marketing, general and administrative 41,509 43,293
   Interest 739 1,157
      Total costs and expenses 129,200 120,955
Income before taxes 8,101 14,043
Income tax provision 405 553
Net income $ 7,696 $ 13,490
Net income per share $ 0.07 $ 0.12
Weighted average number of shares used in
   computing per share amounts:
114,533 112,434
Nine Months
Ended September 30,

1992 1991
   Product sales $ 290,436 $ 291,475
   Royalties 68,567 49,379
   Contract and other 8,572 18,217
   Interest 34,690 37,334
      Total revenues 402,265 396,405
Costs and expenses
   Cost of sales 49,881 52,397
   Research and development 208,919 161,594
   Marketing, general and administrative 125,067 132,551
   Interest 2,996 3,804
      Total costs and expenses 386,863 350,346
Income before taxes 15,402 46,059
Income tax provision 770 1,845
Net income $ 14,632 $ 44,214
Net income per share $ 0.13 $ 0.39
Weighted average number of shares used in
   computing per share amounts:
113,561 112,297
September 30,
1992 1991
Selected balance sheet data
   Cash and short-term investments $ 464,300 $ 504,406
   Accounts receivable 83,320 86,385
   Inventories 58,744 53,510
   Long-term marketable securities 213,142 201,693
   Property, plant and equipment, net 414,616 322,638
   Other long-term assets 36,366 43,500
   Total assets 1,284,022 1,220,245
   Total current liabilities 137,931 110,697
   Long-term debt 152,209 153,048
   Total liabilities 301,916 274,416
   Total stockholders' equity 982,106 945,829